Today at the 8th annual Huawei Analyst event in Shanghai, we witnessed the start of a new journey which will see the Chinese infrastructure and solutions giant place large bets in the ICT space.

Reinventing itself as an end to end provider in the Cloud, Pipe and Devices markets is a bold move which was hinted at last year but is now front and center of the company’s strategy. Chief Marketing Officer, Richard Yu set the scene well with a view that we will see a doubling in Mobile Broadband over the next five years and 70% of SME adopting cloud services while network traffic surges several hundred percent. Huawei will continue to bring an engineering and r&d focus to the market with more than 20,000 new staff added in these areas in 2011!

Most significantly though is the ambitious goal of making enterprise ICT a core part of Huawei business alongside Infrastructure and Devices.

Having gone from unknown to market leader in mobile broadband and from niche player to a major global force with its SingleRan approach to mobile networks, Huawei now has set its sights on the enterprise market. Can Huawei compete and challenge the industry’s 800lb gorilla in the enterprise space? Huawei has shown it has the aptitude to solve technical problems and the business prowess to take advantage of disruptive technologies to forge an entry path in new industries. While enterprise ICT has one giant player, there does appear to be discontent in the value chain and there are certainly significant new challenges as consumer side innovation leaks into the business world (iPhone, cloud services, personalization).

The impact of Huawei on the infrastructure market and its leadership in mobile broadband devices (USB modems etc) are well known but did you know Huawei has a significant presence in enterprise solutions? Prior to today, I certainly didn’t. A couple of stats jumped out from the hundreds of PowerPoint slides that we saw today. Huawei Enterprise group has already achieved $2Bn in revenue, employs over 10,000 and boasts over 6,000 r&d staff dedicated to solving enterprise problems in the ICT space.

Huawei has expanded in dramatic fashion with revenues more than tripling since 2007 on the strength of its infrastructure business and growing international presence. Infrastructure represents approximately 2/3 of the company revenue while the fledgling device business accounts for about 17% today. Perhaps most impressively, international sales have reached 65% of total as Huawei has become a truly global player with operations in over 140 countries.

Looking to the future, Huawei has already resourced and positioned strongly in the cloud space with over 2,500 engineers working on the topic and has a vision to leverage its vertically integrated supply chain to help business in select verticals master the transition from IT to ICT.

A $2Bn, 10,000 employee start up in the enterprise space is not a bad starting point. Huawei has the luxury of cherry picking which verticals to go after first while in the long term planning to be a horizontal player.

With presence in 140 countries, established service, repair and customer centers etc, Huawei could become a significant challenger as businesses look to address opportunities in communications, collaboration, video, telepresence and cloud based services and platforms. Huawei is already eating its own dog food with a strong commitment to cloud services in its Shanghai operations which operates approx. 6,000 virtual machines at any given point and has moved many key business processes to the cloud.

Huawei has achieved leadership in the Pipe, has a fledgling position in Devices (more on this tomorrow) and has set out its stall to be a major player in Enterprise as well as the machine of things segment. While there are many challenges ahead in establishing its enterprise division as a global leader, it would be a very brave analyst who would dismiss their chances. Existing enterprise solutions leaders should take note that there is another well funded, well resourced vendor coming to play.

The Legatum Center at MIT put on a conference last week on entrepreneurship in emerging markets. I’m not overly optimistic about the planet’s prospects, but I left more hopeful than I came: mix a lot of creative energy with good technology and a sense of purpose, and as a species we just might contrive to live long and prosper.

A case in point is Sproxil, a Nigerian start-up which presented its method for using scratch-off labels and SMS to ensure the legitimacy of a drug at the point of sale. Drug counterfeiting is a huge problem in the developing world. Given desperate need and loose regulatory oversight, it should not be surprising that there is a major business in supplying counterfeit or substandard drugs to pharmacies and other outlets in Asia and Africa.

Just how major is difficult to say, as with most illegal activities, but in 2009 Nigeria’s food and drug regulator estimated that 17% of the drugs sold in the country were counterfeit. A Nigerian audience member at Sproxil’s presentation gave anecdotal confirmation: in his section of Lagos, knowledgeable people get prescription drugs from only one pharmacy, preferring it even to hospital dispensaries, because it is known to deal only in legitimate product.

Of course, the cost is not just monetary. Sproxil’s CEO, Ashifi Gogo, cited an International Policy Network estimate of 700,000 annual deaths due to counterfeit tuberculosis and malaria drugs.

Sproxil works with pharmaceutical manufacturers to place a unique identifying code in a scratch-off label on each package. At the point of purchase, the customer scratches off the label covering, sends a free SMS with the code to Sproxil, which checks the submitted code against its database and sends a return text indicating whether or not the drug is legitimate.

Be that as it may, the fact remains that a very simple mobile technology can now be used in a straightforward manner to address a serious problem that affects the well-being of millions. As I say, I’m marginally more hopeful.

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID.

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.

it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm. The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6th. I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week. So, what next?

Will we see significant priced based competition for mobile data among the top US operators?

Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?

What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?

How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.

Returning from CTIA in Las Vegas last week and with only 2 days before going off on vacation to Florida, I found myself reflecting that two of the most interesting meetings I had at the show were with mobile operators.

During CTIA I spent some time with AT&T emerging devices and T-Mobile M2M teams and was impressed with how both these units had managed to cut (or at least untie) the cord to the mother ship and avoid having innovation stifled by the Borg up at Corporate.

AT&T’s efforts to encourage a broad range of new applications and devices has definitely paid dividends with Mr. Lurie and his team adding an impressive 1M users in Q409 as a result of new device categories (mostly PND and EBR).

T-Mobile revealed a somewhat unheralded pedigree in M2M.

Partnership is the order of the day.

AT&T highlighted partner applications ranging from location enabled pet collars (Apisphere) to glow cap bottles to aid compliance with medication schedules (Vitality) to a very cool new tablet from Openpeak which is very different to the announced but apparently supply side challenged iPad. Verizon Wireless and Sprint are of course also praying at the alter of open development but perhaps with less public presence.

When I think of enterprise mobility, AT&T and Verizon Wireless are top of mind but T-Mobile has in fact quietly been developing strong competency in the M2M space over the last 7-8 years.

T-Mobile offers four different SIM form factors to suit specific applications and have enjoyed triple digit growth for the last four years. T-Mobile US has quietly activated “hundreds” of different device types on its network with only a handful of devices being rejected or pulled due to network unfriendly characteristics. These devices span Telematics, Connected Energy, Telemedicine and several other applications.

So what is the common DNA of two very different operators that has allowed them to innovate and focus on new opportunities? Separation and operational autonomy to facilitate and open funnel approach to partners and speed of execution not normally associated with US carriers.

In the case of AT&T, the Emerging Devices group was chartered with developing a new space and freed from the legacy of voice & data consumer tariffs and prepaid/postpaid categories which just don’t cut it in the new connected reality where users will have multiple devices connected but used in very different ways. Mr. Lurie and his team have been able to streamline device certification and experiment across the spectrum of business models for new connected applications.

For T-Mobile, speed of certification (days not months) and the independence of being a self-contained unit (own engineers, own sales although linked to broader enterprise group) reporting to Finance & Strategy have allowed them to pursue their “easiest to do business with” approach to the M2M markets.

So, the takeaway? Innovation is alive and well at US operators but separation from the collective corporate mind is essential.

We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.

Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.

Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:

Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end. If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies. Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.

Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google. Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.

Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.

Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.

As we rapidly close the cover on one of the toughest years the telecommunications, content and internet industries have ever seen, SA takes a look ahead beyond the recession to detail the key megatrends for the mobile industry in 2010.

We see a tough but positive mobile ecosystem outlook with devices recovering stronger than services. More consolidation is likely among network operators, while profits for device vendors will continue to flow away from handset only vendors in favor of device/services integration specialists. Emerging markets will continue to dominate volume with strong 3G rollout competition expected. The global market for services, applications, devices and infrastructure will post modest growth of approximately 3% in 2010.

The total mobile industry revenue including services, infrastructure and devices was flat in 2009. We expect a modest growth of 2.8% in 2010 to $1140B.

· In 2009, only strong growth in data spends by users ensured that total industry revenues did not decline. Data revenues grew 9.5% in 2009 and are expected to grow at a 13% rate in 2010 reaching over $200B.

· Handset market sell through revenue will rebound well in 2010, posting growth of 4% while the infrastructure market will continue to struggle and will decline slightly.

Key issues shaping the 2010 landscape include:

Operators needing to balance the the strong rise in Capex requirements driven by the data traffic explosion against slow revenue growth. The likely outcome being significant M&A, network sharing and even applications development.

Handset OEMs will be forced will put the early stake in the ground for new device categories. Traditional OEMS will continue to struggle to match the Apple & Google vertical integration strategy which has proven so successful.

As the big five vendors focus on smart phones and content/services in the open markets, a race develops to get services/apps onto feature phone products or other operator customized devices

On-portal traffic continues to grow but is outpaced by off portal session growth. Contextualization and personalization of the user experience will determine winners and losers.

The rapid diffusion of Flash and HTML 5 on handsets could negate much of the need for mediacos to use open platforms/app stores in mature markets.

In the business sector we see SMEs and Manage Mobility as key battlegrounds. We see growth in hosted services for SMEs (e.g. Unified Communications infrastructure-one phone mobile and fixed, one voicemail etc. Personal v corporate liable devices (iPhone v BlackBerry) becomes a major issue.

In the Emerging Markets area we see consolidation & 3G expansion in urban areas as key battlegrounds. With improved financing prospects, there will be significant consolidation among regional operators and rationalization of holdings.